WTF WTI

Having dropped on a surge in crude production and surprise inventory build, the machines decided it was the perfect time to panic-bid WTI futures (on the back of reports that some Gulf of Mexico production was shut in due to an outage at Shell’s Enchilada platform), running stops from the last two days...

Then once that ammunition was exhausted, WTI collapsed back to the lows of the day...

It's good when you can leave office and the general public (at least on the left) thinks you did a great job. But what you really did was take a hot steaming dump in the elevator and run out before the door closed.

Lots of hot money poured into oil and oil services after the weekend Saudi purge headlines. Big up move on Monday. Things were pretty flat Tuesday and nothing special at the Wednesday open. So how does hot money exit a position? Run some stops, try to ignite algo-driven momentum, and flip from long to short. The oil run up is over unless we get explosions in Riyadh.

HIGH PRICED OIL DESTROYS GROWTH According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdfOIL PRODUCERS NEED $100+ OILSteven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.htmlTHE PERFECT STORM (see p. 58 onwards)The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf